Essentially the company supplies portable hotel accommodation to the events sector. The model sounds interesting, and there is clear demand for their services.
I expect the share price to rise slightly on today's news.
However, it's not one that interests me. Firstly, at a market cap. (yesterday) of around £17m, but with adjusted EBITDA losses expected to come in at £1.6m in the first half of the year, the company still looks expensive.
They have recently raised £11m to fund the construction of their next generation of hotel room stock and hospitality units which is necessary for their growth, but I'd be very surprised if they didn't need further funding rounds in future. This company is capital intensive and needs to generate large amounts of cash to be self-funding. I don't see them being able to generate sufficient cash in the near future given today's statement regarding a negative adjusted EBITDA for the first six months of this year.
It's always good to read between the lines of a trading statement as well. Note the following from this morning:-
"the Company has made demonstrable progress in the development of its event
programme and is creating a platform for growth and profitability." In other words growth and profitability are someway off at the moment, and if in any doubt then:-
"I believe the progress made in the underlying operating model, combined with the launch of the Next Generation Portable Hotel in the autumn of this year, provides the platform on which to transform the performance of the business in 2015 and to scale it in 2016."
Longer term, and at a lower price, the company may become interesting, but at the current valuation, a loss making capital intensive company which is consuming cash and valued at over £17m is not for me.
This doesn't suggest I'm bearish either, but I always consider the number of companies out there that are valued similarly and are profitable, cash generative and arguably have better growth prospects.
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